Rosalind Levačić, International Consultant, World Bank and Emeritus Professor of Economics and Finance of Education, Institute of Education University of London Overview of presentation 1. Defining a possible model of per capita financing for general education in Serbia 2. Benefits of a per capital financing system for general education 3. Challenges of a per capita financing system: i. ii. During implementation phase Long term The 3 elements of per capita funding (PCF): state, municipality, school Central government Ministry of Finance Ministry of Education State Autonomous Province Municipality Municipality School School formula Municipality Municipality Municipal formulae School School School School Municipal formulae School based budgeting 3 A fully developed PCF system Consists 0f three essential elements: 1. Central government uses a per capita formula to determine education transfers to municipalities (local government units) which administer schools. 2. Municipalities use a local formula to allocate single line (lump sum) budgets to their schools for all major resources, including staff. 3. Schools have financial autonomy (manage their own budgets) (school principal + school board): the number of teachers is determined by the school according to what it can afford from its budget. 4 A per capita funding formula is not just a fixed amount per student The number of students is the main indicator in the formula but ..... Students are differentiated according to characteristics that cause the costs of educating them to differ: e.g. grade/age, curriculum, location, minority language, social disadvantage. Other factors may be included in a formula: e.g. level of economic development of municipality For schools: type of heating, size of school, population density. 5 School based-budgeting: management of the budget School principal and school board plan the budget: they decide how much goes into each budget line. The budget plan determines the number of teachers and other staff at the school. Principal: manages the budget (assisted by a school accountant) selects and appoints staff (national salary scales) is accountable to the school board and the local self government for the budget Principal and School Board operate within the Ministry of Education’s framework of education goals and national standards. 6 Advantages of PCF compared to an input-based financing system Enhances: Efficiency Equity Transparency Accountability Local decision making Supports other measures to improve the quality of education 7 EFFICIENCY = OUTPUTS INPUTS outputs inputs Outputs in education are varied and difficult to measure. They are: Knowledge and skills leading to employability and income; Measured by student attainment tests Society-wide benefits Inputs Teachers (knowledge and expertise) Non-teaching staff Physical inputs: to support learning to provide school environment EFFICIENCY CAN INCREASES BY REDUCING INPUTS while output stays constant time outputs outputs inputs inputs By itself per capita funding can achieve this EVEN BETTER! EFFICIENCY IS INCREASED BY RASING OUTPUT with inputs constant time outputs inputs outputs inputs To achieve this, per capita funding must be part of a school governance system that focuses on outcomes for students PCF alone doesn’t raise the quality of education School evaluation Accountability for student learning outcomes Externally validated assessment Teacher quality Curriculum Per capita funding and school based management EFFICIENCY AT MUNICIPAL LEVEL PCF promotes school network optimisation Because funding depends on the number of students, municipalities do not lose any education transfer if reduce number of schools and staff. Money saved by closing schools can be spent on transport and improved school facilities. Student attainment is higher in larger single grade classes than in very small classes in small rural schools. 12 GREATER EFFICIENCY AT SCHOOL LEVEL Schools are able to make decisions on how to spend the budget. Schools: know their own resource needs best; can economise on utilities and use the money on their priorities e.g. learning materials, equipment, minor renovations to school building; can more easily procure the goods and services they need to support learning. School improvement plans are supported by schools’ flexibility in using resources. EQUITY BENEFITS OF PCF AT MUNICIPAL LEVEL State formula allocates transfers fairly to all municipalities according to objective factors of need to spend and ability to spend. Student numbers weighted by cost per categories of student (grade, course profile & minority language, low population density, special educational needs, social disadvantage). All students funded to a minimum national cost standard. Government contributes x% and municipality required to contribute (1-x)%. Differences in municipal wealth taken into account: x% larger for poorer municipalities. 14 EQUITY BENEFITS OF PCF AT SCHOOL LEVEL Municipal funding formula: Students funded according the same criteria in all municipal schools. Encourages inclusion: extra weighting per student for: special needs minority language social disadvantage isolated rural location Incentives for schools to recruit and retain students as paid per weighted student 15 Greater local decision making Greater role for local communities in decisions about schooling and hence in developing civil society institutions. Through: • Municipalities taking on more responsibility for the quality of schools in their territory • School principles developing as education leaders and managers of their schools • School Boards (with majority parent and community representation) having an important role in decision making – agree and monitor school budget Greater transparency and accountability State and municipal funding formulae: make transparent how much each municipality and school receive in public funding. School costs and costs per student are transparent. School-based financial management: principal held accountable for how school budget is spent and with what results. Very important role for School Board in holding school principal accountable. 17 CHALLENGES FOR PER CAPITA FUNDING OF EDUCATION Temporary: during implementation period Long term Easing adjustment for budget losers The whole point of PCF is to change the distribution of education funding to make it more efficient and more equitable. Winners and losers: some municipalities and schools receive more funding per pupil than before and others less. Some schools and classes must be closed and teachers made redundant. 19 Buffer funding for municipalities Money kept back to reduce losses and gains. For example: Year 1 Losing municipalities receive at least 95% of last year’s transfer Winning municipalities receive no more than 105% of transfer if previous method of funding used. Year 2 Losing municipalities receive at least 90% of transfer in year 1 Winning municipalities receive no more than 110% of transfer in year 1 Year 3 Losing municipalities receive at least 75% of transfer in year 2 Winning municipalities receive no more than 125% of transfer in year 2 Year 4 Formula determines transfers for all municipalities. Encouraging municipalities to optimise school networks Ministry of Education sets out criteria and assists with advice on analysis of school network Provision of redundancy pay and enhanced retirement for school staff conditional on permanent removal of positions Incentive grants for municipalities submitting school network optimisation plans for improving remaining schools First year of school budgets Problem: financial year starts in January and school year in September. If number of teachers has to be reduced due to budget constraint, must be done in September to avoid disrupting students’ education. Solution Adjust formula determined school budgets in year 1 so that there is sufficient to pay for existing teachers from January to August. Building capacities in municipalities and schools Training programme needs to be planned and resourced for: Municipal finance officers in formula funding Municipal and school accountants in executing school budgets School principals in planning and managing budgets School Board members in planning and monitoring the school budget and holding principal to account Support and advice- Help Desk Long term challenge: formula Select PCF formula indicators that provide right efficiency and inclusion incentives: 1. must be factors municipalities cannot manipulate to get more money (NOT number of classes, schools, staff or students categorised with specific special needs) not past expenditures use indicators that predict cost differences e.g. low population density, poverty, income per capita 2. Ensure municipalities and schools do not supply inflated data to get more money- data audits 3. Good Education Information System essential Long term challenge: schools decide staffing Managing school budgets School principals and Boards must have flexibility in choosing class organisation and staff structures. Abolish norms on administrative, technical and support staff Set large maximum class size because schools are not funded to run 2 or 3 small classes per grade Have very few subjects where splitting class into 2 teaching groups is compulsory Long-run challenge: ensuring funding benefits students Education transfer to municipalities is earmarked (is categorical) Municipalities must top up the state transfer per student to at least the defined national cost standard Place a limit on the proportion of the school’s budget that can be spent on staff salaries (e.g. 85% maximum) Hold school principals accountable for management of the budget Auditing and sanctions Strengthening and training School Boards Long term challenge: preserving access Preventing closure of small classes and schools that are needed for maintaining access. Set clear criteria for additional funding of these schools excluding inefficient high cost schools. Additional funding through: • more complex funding formulae or • keep these schools out of the formula and fund according to number of classes needed Long term challenge: develop principals as educational leaders at top of career ladder Financial and resource manager: accountable for good management of school budget AND Instructional leader: accountable for quality of education and standards achieved by pupils. Appoints teachers Evaluates teachers’ performance Improves teacher practice Long term challenge: create effective School Boards Vital in holding school director to account and making his/her activities transparent. School Boards must have a constitution: sets out responsibilities and powers; School staff must be in a clear minority – School Boards are NOT workers’ councils. Training school board members: must be always available 29 Challenge for Ministry of Education in a system of self-managing schools The Ministry of Education moves from a concern with rules about input standards in a centralised system to focussing on output standards in a system of self-managing schools. Educational goals are set in terms of learning outcomes for students and these are monitored by the Ministry of Education – at national, local government and school level. 30 The biggest challenge: putting in place all the elements of a school system focused on outcomes and quality School evaluation Accountability for student learning Community involvement Parental support Externally validated assessment Teacher quality Good leadership Curriculum Per capita funding and school based management I’m sure you will meet these challenges successfully. Thank you for listening.